Mo st 10 year gilt fund presentation
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Transcript of Mo st 10 year gilt fund presentation
India’s
First
Funds
10 10
in your portfolioGet the Power of 10
Presenting
Motilal Oswal MOSt 10 Year Gilt Fund(An open ended Gilt Scheme)
stOpens: 21 Nov 2011thCloses: 5 Dec 2011NFO
1
Factors impacting interest rate
?Commodity price movement
?Currency movement
InflationEconomic Growth
?GDP
?Balance of Payment
Liquidity
?Fiscal deficit
?Investment outlook
0
2
4
6
8
10
12
9/1
/2009
11/1
/2009
1/1
/2010
3/1
/2010
5/1
/2010
7/1
/2010
9/1
/2010
11/1
/2010
1/1
/2011
3/1
/2011
5/1
/2011
7/1
/2011
9/1
/2011
WPI
(in P
erc
enta
ge)
-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
7/1
0/2
000
7/1
0/2
001
7/1
0/2
002
7/1
0/2
003
7/1
0/2
004
7/1
0/2
005
7/1
0/2
006
7/1
0/2
007
7/1
0/2
008
7/1
0/2
009
7/1
0/2
010
7/1
0/2
011
Current Scenario
2
Source : CGA, Ministry of Finance, CIRA
Slowing Growth
GPD
Gro
wth
10
9
8
7
6
5
9.6
9.3
6.8
88.5
7.6
FY07
FY08
FY09
FY10
FY11
FY12
E
Source: MOSL Research
Liq
uid
ity A
dju
stm
ent
Faci
lity
(R
s B
n)
Tight Systemic Liquidity
Source : Bloomberg
Inflation close to double digit
Source : Bloomberg
As a result, interest rates have increased significantly in recent months
12/1
2/2
008
2/1
2/2
009
4/1
2/2
009
6/1
2/2
009
8/1
2/2
009
10/1
2/2
009
12/1
2/2
009
2/1
2/2
010
4/1
2/2
010
6/1
2/2
010
8/1
2/2
010
10/1
2/2
010
12/1
2/2
010
2/1
2/2
011
4/1
2/2
011
6/1
2/2
011
8/1
2/2
011
10/1
2/2
011
in U
SD
MSCI EM Commodity Index9,288
6,9448.78
9.67
8.24
7.84
8.43 8.37
7.82
7.53
4.34 4.22
4.40
3.96
4.46 4.54 4.51
4.00
3.00
3.20
3.40
3.60
3.80
4.00
4.20
4.40
4.60
4.80
5.00
7.00
7.50
8.00
8.50
9.00
9.50
10.00
1-A
pr-
10
1-M
ay-1
0
1-J
un-1
0
1-J
ul-
10
1-A
ug-1
0
1-S
ep-1
0
1-O
ct-1
0
1-N
ov-
10
1-D
ec-
10
1-J
an-1
1
1-F
eb-1
1
1-M
ar-1
1
1-A
pr-
11
1-M
ay-1
1
1-J
un-1
1
1-J
ul-
11
1-A
ug-1
1
1-S
ep-1
1
Worl
d G
DP G
row
th (
in P
erc
enta
ge)
India
n G
DP G
row
th (
in P
erc
enta
ge)
India 2011 India 2012 World 2011 World2012
Interest Rate Outlook
3
Source : IMF Data Source : Bloomberg
?Systemic liquidity expected to improve as capital investments are decelerating and high interest rates are
leading to strong deposit growth
Inflation momentum turning negative & expected to ease?
Source: MOAMC Internal Analysis.
The statements contained herein may include statements of future expectations and other forward-looking statements that are based on
external current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance
or events to differ materially from those expressed or implied in such statements. Please refer to the scheme information document for
further information.
Interest rates expected to decline
Case for Investment 10 Year G-Sec
4
Interest rates nearing its 9 year peak
?Provides an opportunity to play the interest rate cycle.
?Long duration bonds are a good way to play it.
Government securities (G-Sec)
?Provides access to liquid and Credit-Risk free investment
?Low risk premium - sovereign guarantee
?Low illiquidity premium – G-Secs are most liquid part of bond market
The statements contained herein may include statements of future expectations and other forward-looking statements that are based on external
current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to
differ materially from those expressed or implied in such statements. Please refer to the scheme information document for further information.
Source: MOAMC Internal Analysis.
Interest Rates (Yields) Nearing Peak
5
The statements contained herein may include statements of future expectations and other forward-looking statements that are based on external
current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to
differ materially from those expressed or implied in such statements. Please refer to the scheme information document for further information.
5.00
5.50
6.00
6.50
7.00
7.50
8.00
8.50
9.00
9.50
10.00
90
95
100
105
110
115
120
125
130
135
140 2
1-A
ug-0
7
21-O
ct-0
7
21
-Dec-
07
21
-Feb-0
8
21
-Apr-
08
21
-Jun-0
8
21
-Aug-0
8
21
-Oct
-08
21
-Dec-
08
21-F
eb
-09
21
-Apr-
09
21
-Jun-0
9
21
-Aug-0
9
21
-Oct
-09
21
-Dec-
09
21
-Feb-1
0
21
-Apr-
10
21
-Jun-1
0
21
-Aug-1
0
21
-Oct
-10
21
-Dec-
10
21
-Feb-1
1
21
-Apr-
11
21
-Jun-1
1
21
-Aug-1
1
Yie
ld (
in P
erc
enta
ge)
Inve
stm
ent
Val
ue (
in R
s)
Yields Near Peak
Investment Value Yield
Source: RBI NDS OM data as on 31.10.2011 Investment value calculated using clean price & paid coupon
9.51% 135.11
97.31
5%
Why MOSt 10 Year Gilt Fund
6
Access to 10 Year Benchmark G-Sec
Invest predominantly in the10 Year Benchmark G-Sec
Purest play on the interest rate cycle
No active duration management
10 year benchmark G-Sec is the most liquid segment of the market
Credit risk free returns
Indexation benefit
Markets and Volumes: Ample Liquidity
7
Source RBI on 31.10.2011
136,960 126,610
180,590
138,315
46%
47%
52%
52%
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
42%
44%
46%
48%
50%
52%
54%
Jun-11 Jul-11 Aug-11 Sep-11
10 Year G - Sec Liquidity
Monthly G - sec Volume (Rs. Cr) % of 10 Yr Benchmark G-sec in Total volume (Rs. Cr)
Total Outstanding Government of India Securities Rs.2,387,333.47 Cr
Asset Allocation
8
Security
10 Year Benchmark G-Sec 90 – 100 % Low
Other Government Securities
(7 to 12 years), T-Bills, 0 – 10 % Medium- Low
Cash Management Bills,
CBLO & Repo
Investment Risk
For further details, please refer to the Scheme Information Document (SID)
The Motilal Oswal MOSt 10 Year Gilt Fund would primarily invest in
Government bonds:
Product Features
9
Type of the scheme : An Open Ended Gilt Scheme
Two Plans : Dividend & Growth
Total Expenses : 0.99%
Exit Load : 0.5% if redeemed within 3 months
Min Subscription : Rs.10000 & in multiples of Re. 1 thereafter
NFO Opens : 21st November 2011
NFO Closes : 5th December 2011
Fund Manager : Abhiroop Mukherjee
B.com (H), MBA 4yrs Experience in Trading Fixed Income Securities viz.
G-Sec, T-bills, Corporate Bonds CP, CD etc.
Earlier worked with PNB GILTS LTD. as WDM dealer for 2007-2011
For further details, please refer to the Scheme Information Document (SID)
10
DISCLAIMER: This presentation has been prepared and issued on the basis of internal data, publicly available information and other sources believed to be reliable. The information
contained in this document is for general purposes only and not a complete disclosure of every material fact and terms and conditions and features of Motilal Oswal MOSt 10 Year Gilt Fund
(MOSt 10 Year Gilt Fund). The information / data herein alone is not sufficient and shouldn’t be used for the development or implementation of an investment strategy. It should not be
construed as investment advice to any party. All opinions, figures, charts/graphs, estimates and data included in this presentation are as on date and are subject to change without notice.
While utmost care has been exercised while preparing this document, Motilal Oswal Asset Management Company Limited does not warrant the completeness or accuracy of the information
and disclaims all liabilities, losses and damages arising out of the use of this information. The statements contained herein may include statements of future expectations and other forward-
looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to
differ materially from those expressed or implied in such statements. Readers shall be fully responsible/liable for any decision taken on the basis of this presentation. No part of this document
may be duplicated in whole or in part in any form and/or redistributed without prior written consent of the Motilal Oswal Mutual Fund/Motilal Oswal Asset Management Company Limited.
Readers should before investing in the Scheme make their own investigation and seek appropriate professional advice.
Statutory Details: Constitution: Motilal Oswal Mutual Fund has been set up as a trust under the Indian Trust Act, 1882. Trustee: Motilal Oswal Trustee Company Limited. Investment
Manager: Motilal Oswal Asset Management Company Ltd. Sponsor: Motilal Oswal Securities Ltd.
Scheme Classification : Motilal Oswal MOSt 10 Year Gilt Fund (MOSt 10 Year Gilt Fund), an open ended gilt scheme Investment Objective: The primary investment objective of the
Scheme is to generate credit risk-free returns by investing in a portfolio of securities issued by the Central Government and State Government. Asset Allocation: 10 yr Benchmark
Government Security: 90%-100%; Other Government Securities (7 to 12 years), T-Bills, Cash Management Bills, CBLO & Repo: 0-10%. Load: Entry Load: Nil Exit Load: 0.50% for exit
within 3 months Terms of Issue: Minimum Application Amount: During NFO& ongoing basis: Rs. 10,000/- and in multiples of Re. 1/-thereafter. Face Value & Issue Price: Offer of units
of Rs. 10/- per unit during the New Fund Offer and at NAV based prices on ongoing basis. Investor Benefits and General Services: During NFO, Investors can also subscribe to the units
through the mutual fund trading platforms viz. BSE StAR MF of Bombay Stock Exchange Limited (BSE) and Mutual Fund Service System (MFSS) of NSE. The AMC will calculate and publish the
first NAV of the Scheme not later than 30 days from the closure of the NFO. Subsequently, the NAVs will be calculated and disclosed at the close of every Business Day. Risk Factors: (1) All
the Mutual Funds and securities investments are subject to market risks and there can be no assurance that the Scheme’s objectives will be achieved (2) As the price / value /
interest rates of the securities in which the Scheme invests fluctuates, the Net Asset Value (NAV) of units issued under the Scheme may go up or down depending upon the factors
and forces affecting the securities market (3) Past performance of the Sponsor/AMC/Mutual Fund and its affiliates does not indicate the future performance of the Scheme and
may not provide a basis of comparison with other investments (4) Motilal Oswal MOSt 10 Year Gilt Fund (MOSt 10 Year Gilt Fund )is the name of the Scheme and does not in any
manner indicate either the quality of the Scheme, its future prospects and returns. Investors are therefore urged to study the terms of offer carefully and consult their Investment
Advisor before they invest in the Scheme (5) The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Mutual Fund beyond the initial
contribution made by it of an amount of Rs. 1 Lac towards setting up of the Mutual Fund (6) The present Scheme is not a guaranteed or assured return Scheme. Scheme Specific
Risk Factors: The 10 yr Benchmark Government Bond is the most liquid security in the entire Government Bond market, presently it alone constitutes about 80%-90% of the entire
volume of the Government Bond market. The 10 yr Benchmark however changes every year as there is a new 10 yr Benchmark Government Bond issued by the RBI as the existing
one becomes a 9 yr residual maturity paper, hence the market exits from the existing paper and the focus shifts to the new 10 yr Benchmark Government Bond. For further Scheme
Specific Risk Factors & other details, Please read the Scheme Information Document (SID) & Statement of Additional Information (SAI) carefully before investing. A copy of SID, SAI
and KIM alongwith the application form are available at the office of the AMC, R&T, Distributors, or can be downloaded from www.motilaloswal.com/assetmanagement and
www.mostshares.com Investors can also contact us on our toll free number 1800-200-6626 or send email at [email protected]
FundsCall: 1800-200-6626 SMS: GILT to 575753
E-mail: [email protected]: www.motilaloswal.com/assetmanagement
Website: www.mostshares.com
I